County opts for children's social care company despite funding pressures

Worcestershire CC is set to create a company to runs its children’s social care services after being ordered to establish an alternative delivery model by the Department for Education.

The council’s cabinet on 29 March will consider a recommendation by director of children, families and communities Catherine Driscoll to approve the new model after an option to establish strategic partnership with another council was rejected as it did not meet DfE’s requirements for operational independence.

A report to cabinet states the “flexibilities and freedoms” the new company, which will be wholly owned by the council, can provide “regarding new ways of working and workforce development/ recruitment” are “attractive benefits”.

However, the financial appraisal concluded “there are limited quantifiable financial benefits associated with the [company] at this stage, as it does not have an intention in the short-term to generate further income outside of the contract with the council”.

The report estimates £4.6m will need to be invested to establish the company, although this is said to be likely to change as key decisions are taken during implementation.

It adds the cost of service provided by the company is expected to be £77m in 2019-20, increasing to £82m in 2022-23.

However, the additional costs of support services, potential VAT liabilities and £2.5m costs attributable to running and commissioning the company creates a deficit of £7.5m in 2019-20, rising to £11.1m by 2022-23.

However, with “assumed” funding from DfE for irrecoverable VAT, this deficit is reduced to £6.2m from 2019-20, rising to £9.7m by 2022-23.

The report states DfE has stated it is in discussions with Her Majesty’s Revenue and Customs and the Treasury “in the hope” of reaching agreement on a long-term solution in respect of VAT liabilities for councils implementing adopting delivery models.

It also says the predicted deficit position does not take into account the use of children’s services contingency funding assumed in the draft medium term financial plan of £5m in 2019-20 and a £4.5m in 2020-21.

The report adds: “the affordability of the [company] is heavily dependent on the agreement made between the council and the DfE regarding funding” and added: “Therefore, once an agreement has been made regarding funding, the financial model must be revisited to ensure the council identifies the additional budget required to be able to successfully deliver the service within the proposed [company] model.”

The absence of an improved funding settlement for local government by 2020 will have dire consequences for vulnerable families, with councils already being forced to do “profoundly silly things” which will result in more children entering care, the president of the Association of Directors of Children’s Services has warned.

The link between autonomy in the workplace and its effects on overall productivity is well-known, although not necessarily among council staff. This is about to change at Worcestershire CC though, according to new chief executive Paul Robinson.

Children must be protected from the “burning injustice” of growing poverty and “sceptics in the Treasury” must be challenged on the ongoing efficiency drive, according to the new president of the Association of Directors of Children’s Services.

Council leaders, elected mayors, and chief executives have low confidence that they have enough powers and resources available to them to deliver statutory social care services for children and adults, a survey shared exclusively with LGC has found.

The Troubled Families programme has made “significant progress” with a higher proportion of families this year while reducing pressure on children’s social care services, according to the government’s annual evaluation report.

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